Revenues increased 24% in the first quarter to $8.1 million in 2013, compared to 2012.

Gross profit increased 28% to $2.5 million in 2013.

Earnings before non-cash items and finance costs (modified EBITDA) decreased to $25,000 during the 2013 quarter. (See EBITDA table at end of this release for further non-GAAP information).

Net loss for the 2012 first quarter was $403,000 compared to a loss of $124,000 a year earlier.

Working capital at March 31, 2013 was $2.1 million, as compared to $2.3 million at December 31, 2012.

Operational Highlights:

Added four new flavors of our Reed’s Culture Club Kombucha doubling them to eight

Commenced production for a significant new private label customer

“We are very pleased with our top line and margin growth for the quarter,” stated Chris Reed, Founder and CEO at Reed’s Inc. “Our branded sales continue to expand at a healthy rate. We doubled the number of flavors in our Reed’s Culture Club Kombucha line to eight. The new flavors are some of our finest work with flavors like Coconut Water Lime Kombucha and Cabernet Grape Kombucha. In addition, we secured a large private label customer in the foodservice industry that has significant potential. This first quarter profits were reduced considerably by the west coast plant being turned off for production of our core brands while we geared up our Kombucha production. We have figured out how to run our Kombucha more efficiently and expect to see the first quarter inefficiencies fade as the year progresses. We expect our growth to continue.”

James Linesch, Chief Financial Officer, stated, “Our delivery freight increased to excessive levels in the first quarter. Other than the normal freight rate increases, there are two primary factors contributing to the increase. First, due to our west coast plant being consumed with Kombucha production, we were producing most of our branded products on the east coast and had to use expensive temperature controlled shipping to protect the shipments from freezing in the winter. Second, we expanded our Pacific Northwest business at a faster rate than other regions, which is our highest freight cost region. We are currently upgrading our plant and our procedures to accommodate a significant increase in volume. We expect to start producing our core brands again in the west coast plant soon which will drive down freight costs and our unabsorbed plant costs will also reduce with the increased utilization improving margins.”

The Company will conduct a conference call @ 4:15PM EDT on May 14th to discuss its 2013 first quarter results and outlook for the future. To participate in the call, please dial the following number 5 to 10 minutes prior to the scheduled call time (866) 240-5139. International callers should dial (713) 481-0091.

Reed’s, Inc. makes the top-selling natural sodas in the natural foods industry sold in over 13,000 natural food markets and supermarkets nationwide. Its six award-winning non-alcoholic Ginger Brews are unique in the beverage industry, being brewed, not manufactured and using fresh ginger, spices and fruits in a brewing process that predates commercial soft drinks. The Company owns the top-selling root beer line in natural foods, the Virgil’s Root Beer product line, and a top-selling cola line in natural foods, the China Cola product line. In 2012, the Company launched Reed’s Culture Club Kombucha line of organic live beverages. Other product lines include: Reed’s Ginger Candies and Reed’s Ginger Ice Creams. In 2009, Reed’s started producing private label natural beverages for select national chains. Reed’s products are sold through specialty gourmet and natural food stores, mainstream supermarket chains, retail stores and restaurants nationwide, and in Canada, as well as through private label relationships with major supermarket chains.

For more information about Reed’s, please visit the Company’s website at: http://www.reedsinc.com or call 800-99-REEDS.

Some portions of this press release, particularly those describing Reed’s goals and strategies, contain “forward-looking statements.” These forward-looking statements can generally be identified as such because the context of the statement will include words, such as “expects,” “should,” “believes,” “anticipates” or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. While Reed’s is working to achieve those goals and strategies, actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These risks and uncertainties include difficulty in marketing its products and services, maintaining and protecting brand recognition, the need for significant capital, dependence on third party distributors, dependence on third party brewers, increasing costs of fuel and freight, protection of intellectual property, competition and other factors, any of which could have an adverse effect on the business plans of Reed’s, its reputation in the industry or its expected financial return from operations and results of operations. In light of significant risks and uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by Reed’s that they will achieve such forward-looking statements. For further details and a discussion of these and other risks and uncertainties, please see our most recent reports on Form 10-K and Form 10-Q, as filed with the Securities and Exchange Commission, as they may be amended from time to time. Reed’s undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

REED’S, INC.

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2013 and 2012

(Unaudited)

Three months ended March 31,

2013

2012

Sales

$

8,126,000

$

6,539,000

Cost of tangible goods sold

4,905,000

4,185,000

Cost of goods sold – idle capacity

686,000

369,000

Gross profit

2,535,000

1,985,000

Operating expenses:

Delivery and handling expense

906,000

479,000

Selling and marketing expense

880,000

722,000

General and administrative expense

988,000

740,000

Total operating expenses

2,774,000

1,941,000

(Loss) income from operations

(239,000

)

44,000

Interest expense

(164,000

)

(168,000

)

Net loss

(403,000

)

(124,000

)

Preferred stock dividend

–

(9,000

)

Net loss attributable to common stockholders

$

(403,000

)

$

(133,000

)

Loss per share available to common stockholders – basic and diluted

$

(0.03

)

$

(0.01

)

Weighted average number of shares outstanding – basic and diluted

12,320,516

10,921,076

MODIFIED EBITDA SCHEDULE

Three Months Ended March 31,

2013

2012

Net loss

$

(403,000

)

$

(124,000

)

Modified EBITDA adjustments:

Depreciation and amortization

145,000

183,000

Interest expense

164,000

168,000

Stock option compensation

119,000

26,000

Other stock compensation for services

–

15,000

Total EBITDA adjustments

428,000

392,000

Modified EBITDA income from operations

$

25,000

$

268,000

The Company defines modified EBITDA (a non-GAAP measurement) as net loss before interest, taxes, depreciation and amortization, and non-cash expense paid with company securities. Other companies may calculate modified EBITDA differently. Management believes that the presentation of modified EBITDA provides a measure of performance that approximates cash flow before interest expense, and is meaningful to investors.

REED’S, INC.

CONDENSED BALANCE SHEETS

March 31, 2013

December 31, 2012

ASSETS

(unaudited)

Current assets:

Cash

$

726,000

$

1,163,000

Inventory

6,301,000

5,794,000

Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $300,000 and $399,000, respectively

2,228,000

1,961,000

Prepaid inventory

190,000

201,000

Prepaid and other current assets

251,000

212,000

Total Current Assets

9,696,000

9,331,000

Property and equipment, net of accumulated depreciation of $2,471,000 and $2,351,000, respectively